Relationship between money and inflation

Reference no: EM133339791

Question: Silverman-Socks, an investment banking firm, was trying to save money and so this year instead of hiring an analyst from the prestigious McCombs Business school program they hired a graduate from the UTD of Business School. His first task was to create a short briefing paper on the inflation outlook. Here is a key sentence from the paper

Inflation is always and everywhere a monetary phenomena. If the money supply increases, the inflation rate goes up a short time after that. Since the money supply has been going up, we're in for an extended period of rising inflation.

Assume he's right in pointing out that the money supply has been going up but criticize his analysis, using some of the theory you learned about the relationship between money and inflation.

Reference no: EM133339791

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